The public expenditure plays a vital role in developing countries like India. It has several effects on income, output and employment. Therefore, it is regarded as a very essential instrument in the determination of economic development of a country. In developing countries, the increased public expenditure is always desirable.
The importance of public expenditure in any country is as follows:
- The Government needs to fill deflationary gap (excess of output over consumption) and to restore full employment.
- The Government expenditure is needed to development infrastructural facilities like roads, railways, bridges, irrigation facilities etc.
- The Government is also expected to spend on civil administration.
- The Government has to improve agricultural sector by providing subsidies.
- For both internal and external securities the Government has to incur expenditure on law and order and defence forces.
Thus the role of public expenditure in overall development of an economy is very much needed for rapid economic development of a country.
